AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Firms After Retail Sales Jump

The Australian and New Zealand Dollars are trading higher on Wednesday, helped by increased appetite for risk and stronger-than-expected economic data out of Australia. There was no follow-through to the downside following yesterday’s steep sell-offs. This suggests today’s move is likely being fueled by profit-taking and short-covering related to the news. Furthermore, some traders may feel at Tuesday’s weakness may have been overdone.

At 01:47 GMT, the AUD/USD is trading .7102, up 0.0033 or +0.46% and the NZD/USD is at .6779, up 0.0013 or +0.20%.

Australian Retail Sales

Australian retail sales soared in February, jumping the most since November 2017. Earlier today, the Australian Bureau of Statistics (ABS) reported that retail turnover surged by 0.8% after seasonal adjustments, easing beating expectations for a far smaller increase of 0.3%.

Even better news was non-food sales, viewed as a better gauge of discretionary spending, rose by an even faster 0.9% from January.

Also impressive was that the growth was spread across all states and territories except for Tasmania, including in New South Wales and Victoria where home prices have fallen the fastest over the past year.

While today’s report is impressive, the sharp rebound must be put in context. Sales actually fell by 0.4% in December and only increased by 0.1% in January, so the February splurge followed some pretty weak results beforehand.

Australian Trade Balance

Australia’s trade surplus increased to a fresh record $4.801 billion in February, from $4.351 billion in January. Exports were flat for the month while imports were down one percent, the Australian Bureau of Statistics said on Wednesday. Traders were looking for the trade balance to drop to a surplus of $3.7 billion.

Other News

China’s Caixin services PMI for March came in at 54.4 vs. 52.3 expected and 51.1 last. The numbers reflected the fastest growth pace in Chinese activity in nine months. The Australian Dollar gained on the news.

On Wednesday Aussie and Kiwi traders were get the chance to respond to key U.S. data on labor and services. The ADP Non-Farm Employment Change report is expected to show the economy added 184K jobs in March. ISM Non-Manufacturing PMI is expected to have dipped a little lower to 58.1, down from 59.7.

Today’s domestic reports will be welcomed good news for the Reserve Bank of Australia (RBA) who continue to describe the outlook for household spending as an area of uncertainty for the economy. This result may help to ease that uncertainty, at least in the near-term.